OPINION
{1} Today we consider the appeal of plaintiff-appellants Allsup’s Convenience Stores and Allsup Enterprises and the cross-appeal of North River Insurance Company. This case raises an important question about the appealability of remittitur orders. We hold that such appeals should be allowed, and that a remittitur should not have been ordered; therefore, the trial court is reversed on that issue and the jury verdict reinstated. As to all other issues, we affirm.
I. FACTS AND ISSUES
{2} The appellants in this case are Allsup Enterprises, Inc. and its subsidiary, Allsup’s Convenience Stores (“Allsup’s”). 1 The appellees are North River Insurance Company and United States Fire Insurance Company (“North River”), which were, respectively, the workers’ compensation and general liability insurers from 1984 to 1990 for all of Allsup’s businesses. Below, the appellees were formally denominated “Crum and Forster Commercial Insurance and its Affiliates North River and U.S. Fire.” The insurance carrier defendants were referred to collectively as “Crum and Forster” throughout the proceedings in the lower court. North River and U.S. Fire jointly have been the real parties in interest throughout the relevant period, and as stated by North River in its brief on cross-appeal, references in the record to “Crum and Forster” include defendants North River and U.S. Fire. 2 Thus, wherever “Crum and Forster” is referred to here, it refers to the acts of North River.
{3} North River and Allsup’s entered into a series of agreements for retrospective premium insurance. Under this plan, the premium is based in part upon the actual losses that occur during the policy period. Since these actual losses often or usually are not known until after the end of the policy period, the insured pays an estimated premium during the period, which is retrospectively adjusted downward or upward to a certain maximum at the end of the period. The adjustment depends on the insured’s paid or incurred losses, according to the type of policy.
{4} On the policies that form the background in this case, Alexsis, Inc. was the third party administrator directly responsible for claims handling. A three-way Memorandum of Agreement was signed to govern the relationship among Allsup’s, Crum & Forster, and Alexsis. Three areas of disagreement developed between North River and Allsup’s, that later became claims in this lawsuit. The claims are: 1) North River’s alleged breach of obligations with respect to the administration of workers’ compensation claims made against Allsup’s, specifically obligations under the Memorandum of Agreement that AIlsup’s claims, and North River denies, imposed on North River a duty to supervise and ensure the quality of claims handling by Alexsis; 2) North River’s alleged wrongful drawdown on a letter of credit, where the issue is which premiums under a number of successive policies were backed by the letter; and 3) North River’s alleged failure to perform loss control services, such as instituting programs to diminish injuries on the job, deemed by Allsup’s to be integral to the risk financing function of North River, but claimed by North River to be a role it never undertook.
{5} A number of other issues are before us on appeal: 1) whether Allsup’s has foregone the opportunity to object to certain jury interrogatories and the special verdict form; 2) whether the trial court properly found the Memorandum of Agreement to be ambiguous as a matter of law and if so, whether the jury’s interpretation thereof was supported by substantial evidence; 3) whether the covenant of good faith and fair dealing is enforceable against North River for a failure to disclose information regarding the claims handling by Alexsis; 4) whether North River owed a fiduciary duty to Allsup’s and, if so, whether it was breached; 5) whether the jury was properly instructed under NMSA 1978, § 57-12-1 to -22 (1995); 6) whether the trial court’s granting of summary judgment in favor of Allsup’s on the drawdown on the letter of credit was correct; 7) whether the jury award of punitive damages was unconstitutional or otherwise excessive; 8) whether the remittitur of a punitive damages award is properly before this Court, and if it is, whether it should be sustained or the jury’s verdict reinstated. We consider the last issue first because of its jurisdictional importance.
II. ALLSUP’S APPEAL
A. Remittitur
{6} On November 14, 1994, judgment was entered on the jury verdict of $540,000 in compensatory damages for Allsup’s and against North River for inadequate claims handling, and for $4,792 in compensatory damages for the wrongful drawdown of the letter of credit. The jury also assessed punitive damages against North River for $4,000,000 for bad faith in the supervision of handling of claims and $500,000 for the wrongful drawdown. By directed verdict, the trial court awarded North River $1,645,-708 on its counterclaim for unpaid premiums by Allsup’s.
{7} On November 28, 1994, North River filed a “Motion to Amend the Judgment, for Judgment Notwithstanding the Verdict, or in the Alternative, for New Trial, or for Remittitur.” On December 27,1994, the trial court issued Memorandum Order No. 66, addressed to North River’s motion. The motion for JNOV was denied. With respect to the issue of remittitur or a new trial, the motion was framed in alternative terms. We consider the order, on its facе granting the motion for remittitur, to have been a grant of North River’s motion generally, so that Allsup’s had a choice when the motion was granted of accepting remittitur or a new trial. The court exercising its discretionary power, albeit ambiguously, offered Allsup’s the option of remitting a part of the award or accepting a new trial. As stated in Richardson v. Rutherford,
{8} The next day, on December 28, 1994, North River filed a motion under Rule 1-60(B) NMRA 1998 asking the court to “stipulate a time period during which Allsup’s had to either accept a reduction or elect a new trial.” Rather than respond to this motion or make an election, Allsup’s filed its Notice of Appeal on December 29, 1994. The trial judge then ruled she lacked jurisdiction to consider the merits of North River’s motion to clarify. See Khalsa v. Levinson,
{9} Allsup’s appeal initially aрpeared not to be accommodated by our case law and appellate rules. Nally v. Texas-Arizona Motor Freight, Inc.,
{10} The historic rationale for remittitur practice is that it saves the time and expense of a new trial if the plaintiff will accept a lesser sum as a verdict. The plaintiff is satisfied because the expense of a new trial is avoided, and the defendant is satisfied because he or shе either obtains a new trial, or has had the verdict against him or her reduced. Thus this procedure generally has the effect of facilitating settlement, thereby enhancing judicial economy. See Hudson v. Otero,
{11} In the federal courts, this familiar remittitur procedure gained the United States Supreme Court’s stamp of approval in Donovan, which barred plaintiffs from seeking review of remittitur orders, even those accepted “under protest,” which is merely the procedural technique whereby remittitur is conditionally accepted for purposes of rendering the judgment final even though the plaintiff does not acquiesce in the aspect of damages. The Court offered no analysis for its ruling, but merely cited to “a long and unbroken line of decisions [that] has frequently been applied.” Wiggs v. Courshon,
{12} For example, in Dimick v. Schiedt,
In the light reflected by the foregoing review of English decisions and commentators, it, therefore, may be that if the question of remittitur were now before us for the first time, it would be decided otherwise. But the doctrine has been accepted as law for more than a hundred years and uniformly applied in the federal courts during that time.
A careful analysis of the plaintiffs position ... does not necessarily lead to the conclusion that the remitting plaintiff reaps such great benefits. By consent to a remittitur, the plaintiff cannot “freeze” his verdict at the reduced amount. He can lose part or all of it on defendant’s appeal and can even be subjected to the uncertainties of a new trial if the appellate court reverses the trial court on the denial of defendant’s new trial motion.
Irene Sann, Remittitur Practice in the Federal Courts, 76 Columbia L.Rev. 299, 314 (1976).
{13} There is also serious debate on whether the current remittitur procedure actually saves time and money. When a non-remitting plaintiff elects a new trial, a jury must be impaneled and valuable judicial time is consumed, and in this case it may be noted, a potential twelve weeks — the length of the first trial. Even assuming judicial economy to be a relevant factor, it is not or at least should not be the overriding goal of our system in resolving disputes:
[I]n civil matters like this one, courts exist to resolve disputes between litigants. When a plaintiff claims that he has been injured because of the fault of the defendant, the court proceeding is designed to give the plaintiff a fair opportunity to prove his contentions and to obtain adequate compensation, if he is correct. Conversely, a defendant is afforded a fair chance to meet a plaintiffs contentions head-on. The interest of courts in efficient administration, though important, is not superior to the interests of the plaintiff or the defendant.
Donovan,
{14} We believe that for the court to require a remittitur when there is such a limited right of appeal is a violation of the plaintiffs constitutional right to a trial by jury, since, as a practical matter, the verdict is that of the court and not the jury. N.M. Const, art. II § 12. That is why under current practice it has been held that the court must offer the plaintiff the alternative of undergoing a new trial. Chavez-Rey v. Miller,
{15} At least nine other states have adopted a rule similar to the one we adopt today, all with apparent success. See Betz v. Timken Mercy Med. Ctr.,
{16} The next questions which must be considered are when and how a trial judge may justifiably find the jury’s awаrd of damages to be excessive, and what is the standard of review. The proper amount of damages is of course bound up in the assessments made by a jury during the actual trial itself, for its verdict is presumed to be correct. It is a “fundamental function of a jury to determine damages.” Richardson v. Carnegie Library Restaurant, Inc.,
time and time again our appellate courts have come to the conclusion that the best way to arrive at a reasonable award of damages is for the trial judge and the jury to work together, each diligently performing its respective duty to arrive at a decision that is as fair as humanly possible under the facts and circumstances of a given case.
Sandoval v. Chrysler Corp.,
[T]he findings of the jury should not be disturbed as excessive except in extreme cases, as where it results from passion, prejudice, pаrtiality, sympathy, undue influence, or some corrupt cause or motive where palpable error is committed by the jury, or where the jury has mistaken the measure of damages. However, the mere fact that a jury’s award is possibly larger than the court would have given is not sufficient to disturb a verdict.
Richardson v. Rutherford,
Our former practice of ordering reductions of awards where we thought them to be excessive without specifically finding an indication of passion, prejudice, etc., as was done in [Mares v. N .M. Public Service Co.,42 N.M. 473 ,82 P.2d 257 (1938) and Boydston v. Twaddell,57 N.M. 22 ,253 P.2d 312 (1953) ] was changed in the case of Hall v. Stiles, without mention of the former cases. In view of possible conflicts, we expressly overrule such practice as was followed in the Mares and Boydston cases in favor of the rules later announced in Hall v. Stiles. (Emphasis added.)
{17} In light of the above, it is clear that only when the opinion of the trial judge is demonstrably more reliable than that of the jury will its opinion be recognized. The burden of knowing when to order remittitur falls particularly heavily upon the trial judge, whose relation to the jury and the actual trying of the case must in turn be capable of assessment by a reviewing court. It is for this reason that we now extend the “specific finding” requirement of Montgomery to mean that the trial judge must, when a remittitur is ordered, provide a clear articulation of how and why damages are excessive, applying the above quoted standard in Richardson v. Rutherford to the particular case.
{18} To summarize, we hold that when ordering a remittitur, a trial court must offer the plaintiff the option of a new trial, and that the plaintiff must choose between the two and may accept the remittitur under protest and appeal. On appeal, the record of the court’s specific findings is reviewed on a passion or prejudice standard as detailed in Richardson v. Rutherford. To the extent this holding is inconsistent with Hudson, Natty, and other precedent, such cases are hereby expressly overruled.
{19} The trial judge, therefore, has limited superintendence when ordering a remittitur in that the exercise of such discretion must be supported by express reasons, see Rety v. Green, supra,
{20} We believe that this procedure will provide an efficient means by which the order granting a remittitur or, in the alternative, a new trial may be dealt with on appeal. In the instant case, the trial judge did provide her reasons for ordering remittitur. She wrote in her letter opinion, “The jury’s award of $500,000 in punitive damages on the [letter of credit] claim is utterly disproportionate to the actual damages awarded on that claim and, more importantly, to the evidencе concerning North River’s culpability on this issue.” We see in this statement no hint that passion, prejudice, partiality, sympathy, undue influence or some corrupt cause or motive entered into the jury’s deliberations. Similarly, as to claims administration, the court said, “The $4,000,000 punitive damages award ... is clearly excessive, given the entirety of the evidence concerning plaintiffs and North River’s conduct.” Even assuming that the expression “clearly excessive” constitutes a viable finding implying passion or prejudice, see Henderson v. Dreyfus,
B. Issues Concerning Jury Instructions
{21} Allsup’s also raises two issues concerning the jury instructions. The first is that the trial court abused its discretion in reducing by $3,000,000 damages for the alleged failure of North River to advise on the need for and availability of loss control services such as preventive programs to reduce future claims. Presumably these services would ultimately have resulted in the reduction of premiums to Allsup’s. The jury found that North River owed a fiduciary obligation to disclose this information and breached it in violation of the Unfair Trade Practices Act, NMSA 1978, Sections 57-12-1 to -22. Relying on NMSA 1978, Section 37-1-4, the trial court ruled, however, that a four-year statute of limitations applied to the loss control claim, and that North River was not on sufficient notice thereof until over four years from accrual of the claim, when Allsup’s second amended complaint was filed explicitly alleging elements of the claim.
{22} We do not reach the merits of this issue because Allsup’s must confront here the same problem it faced in post-trial motions, where it argued that loss control damages should be used as a set-off to North River’s judgment against it for unpaid premiums. The difficulty is that the jury interrogatories were framed to first determine when the claim accrued, i.e., whether it was barred by the statute of limitations. If the answer to that question was in the affirmative (which it was), then North River could not be responsible for loss control damages. AJlsup’s never objected to the form or substance of the interrogatories thereby preserving the issue for appeal. Rule 12-216, NMRA 1998 provides: “To preserve a question for review it must appear that a ruling or decision by the district court was fairly invoked ...” We have held that “the trial court must be alerted to a claimed non-jurisdictional error to preserve it for consideration on appeal.” Marquez v. Marquez,
{23} The second issue relating to jury instructions concerns whether joint and several liability must apply to certain claims regardless of how they were presented to the jury. The Several Liability Act, NMSA 1978, § 41-3A-1 to -2 (1987) abolished joint and several liability in all claims to which the doctrine of comparative fault applies. Traditionally, this category of claims does not include contract cases (the basis for Allsup’s’ claims handling claims) because “ ‘contract law is, in its essential design, a law of strict liability, and the accompanying system of remedies operates without regard to fault.’ ” Paiz v. State Farm Fire and Cas. Co.,
{24} Again, we find it unnecessary to reach the substance of the issue. The special verdict form in this case reads in relevant part:
Question 3: Compare the fault of the parties ... for the excessive premium caused by inadequate claims administration or supervision. The Court will multiply each party’s percentage times the total claims administration or supervision damages as found in Question 2. The Court will then enter judgment against any party you have found liable in proportion to the damages found as to that party.
Thus, the form asked for an apportionment of damages caused on all liability theories by all parties, the result being that North River was found only 30% liable, or to the extent of $540,000. At the time the form was prepared, Allsup’s now contends, it was properly sitting on its right to have the trial judge rule post-verdict for joint and several liability, and after the jury verdict, Allsup’s so moved the court. The trial judge found that there had been considerable efforts by herself and counsel to agree on the form for the special verdict and that Allsup’s was quiet if not in declination when presented with the option of objecting to comparative fault questions, even though contract issues were involved. See Sievert v. LaMarca,
{25} Allsup’s now contends that it intended the comparative fault wording to refer to negligence claims only, but a reading of Question 3 indicates it covered all claims handling claims and all defendants. Allsup’s further agreed to a deviation from the standard format of UJI 13-2220, NMRA 1998 which compares “negligence” to a form comparing “fault.” The verdict was clearly and irrevocably structured before it was rendered so as to make it now impossible to determine which claims were successful against which defendants and what the extent of damages was. Allsup’s was apparently aware of this potential outcome, but chose to wait and advance an all-or-nothing position after the verdict, in other words, move for joint and several liability rather than to ask that a more detailed verdict form be put before the jury. The opportunity for Allsup’s to complain with regard to this instruction is therefore, foregone.
III. NORTH RIVER’S CROSS-APPEAL
A. Contract Ambiguity
{26} The first argument in the cross-appeal of North River is that breach of contract damages were improperly awarded because the contract among Allsup’s, North River, and Alexsis did not provide for North River to supervise or ensure claims handling. This is because the contract is alleged to have been unambiguous and, therefore, not subject to fact finding by the jury as to whether these duties were agreed to be included. North River therefore asks us to reverse the award of compensatory and punitive damages that were based on the jury’s finding that the contract did provide for supervision of claims handling and the finding that North River breached the agreement in that regard.
{27} A contract is deemed ambiguous only if it is reasonably and fairly susceptible of different constructions. Levenson v. Mobley,
{28} A trial judge’s determination that a contract is ambiguous is one of law that this Court reviews de novo. Mark V, Inc. v. Mellekas,
{29} The Memorandum of Agreement in the instant case is reproduced here in relevant part:
Alexsis, Inc. agrees to provide complete administration, investigative and adjustment services to Allsup Enterprise (sic), on behalf of Crum and Forster ... 3
Crum and Forster Commercial Insurance Co. agrees to pay the cost of all experts, outside investigation expenses and professional assistance required to investigate and adjust claims.
All lawsuits received on claims under this agreement shall be handled as follows: ... Alexsis will give immediate notice of the suit to Crum & Forster ... Alexsis shall manage all litigation on claims under this agreement in accordance with Crum & Forster Commercial Insurance’s litigation management practices and procedures.
Alexsis, Inc. will provide liaison between Crum and Forster Commercial Insurance Co. and Allsup Enterprise (sic), Inc____ Alexsis is granted $15,000 settlement, draft signing and draft issuing authority per claim ... Crum & Forster Commercial Insurance may conduct periodic audits of Alexsis’ claims files and operations to insure compliance of all procedures.
(Emphasis added.) There are several sources of ambiguity in the Memorandum. First, the language “on behalf of’ is uncertain as to whether it creates an agency or, if not, what relationship among the parties was established. It does not clarify the problem of oversight of Alexsis’ operations, but merely states that Alexsis will represent Crum and Forster’s interest in some way. Whether and how Crum and Forster was to oversee Alexsis is not rendered clear by the manner in which lawsuits were to be handled, which indicates that in the event of a serious problem, Ci’um and Forster would step in and take control. The words “will provide liaison” are legally unclear, and it is ambiguous to what end and for the benefit of which party Crum and Forster was to conduct audits or insure compliance with various procedures.
{30} The evidence as to course of dealing between Crum and Forster/North River and Allsup’s, if anything, seems to create further ambiguity. They had a three-year relationship under a retrospective premium plan prior to entering into the Memorandum of Agreement, and during that time North River conducted audits of Alexsis’ predecessor, the results of which were never requested by or presented to Allsup’s. Allsup’s had complained about Alexsis’ claims administration, but complained only to Alex-sis or Alexander & Alexander and not to North River. There was also evidence that Alexsis was heavily supervised by Crum and Forster as to all claims matters and in fact, Crum and Forster was familiar with and extremely concerned about the situation, as shown by contemporaneous internal memoranda.
{31} In sum, we conclude that the trial court correctly determined that the agreement was ambiguous as to whether North River had assumed a duty to Allsup’s to supervise and ensure the adequacy of claims administration provided by Alexsis. This must be our conclusion in light of the optional and non-directive tone of many of the terms in the contract. Rather than stating forthrightly what the parties’ obligations were, the contract left their status with regard to various duties unclear. Furthermore, a reading of all relevant provisions in the document, and the reaction of Crum and Forster personnel to the сlaims handling situation, lead us to the conclusion that the jury’s interpretation of the ambiguity was supported by substantial evidence. There was a great deal of evidence presented on the parties’ intentions, the purposes sought, trade custom, course of dealing, and course of performance, from which the jury could have found as it did on the issue. In particular, the control retained by Crum and Forster over the operations of Alexsis strongly indicates that Crum and Forster undertook, vis-a-vis Allsup’s, to ensure the performance of Alexsis.
B. Other Issues Surrounding Claims Handling
{32} North River next attacks the jury findings on inadequate claims handling on three fronts: 1) the duty of good faith and fair dealing, 2) fiduciary duty, and 3) violation of the Unfair Practices Act.
{33} “Every contract in New Mexico imposes the duty of good faith and fair dealing upon the parties in the performance and enforcement of the contract.” Paiz,
{34} North River’s next contention is that since both parties’ interpretation of an ambiguous contract must be reasonable and since it behaved according to its presumptively reasonable interpretation of the contract, it was acting in good faith with respect to the contract and cannot be held responsible for breaching the duty of good faith and fair dealing. While a contract that is ambiguous is said to be “susceptible to reasonable but conflicting meanings,” C.R. Anthony,
{35} North River also attacks the jury’s finding that it breached the covenant of good faith and fair dealing by failing to disclose to Allsup’s the continuing inadequate claims handling by Alexsis. North River argues there is no case law specifically imposing such a duty and points to the fact that the Memorandum of Agreement provided that Alexsis was to act as a “liaison” between North River and Allsup’s in these matters. The issue is whether and when an insurer has a good faith duty to disclose information to its insured. North River cites Continental Potash, Inc. v. Freeport-McMoran, Inc.,
{36} In this case, the jury had concluded there was a contract between the parties and that North River had acted in bad faith generally with respect to the supervision of Alexsis’ claims handling. We will not bar as legally ineffective their further conclusion — that mere good faith required disclosure by the insurer of continuing inadequate claims handling — when there is substantial evidence that such disclosure would have prevented the losses suffered by Allsup’s in having to pay excessive premiums under a retrospective worker’s compensation insurance plan. The right of Allsup’s to receive a benefit of the agreement — a premium amount tied fairly to competent claims handling — was injured by North River, whose duty to disclose was called for by the circumstances. By not disclosing this information, North River benefitted because it received premium payments far greater than would otherwise have been due.
{37} We also affirm the determination that North River owed but breached a fiduciary obligation to Allsup’s. “A fiduciary relationship exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of one reposing the confidence.” State ex rel. Udall v. Colonial Penn,
{38} North River next argues that there was no basis for a finding that it violated the Unfair Practices Act because, it is contended, 1) the jury in fact made no such finding, 2) Allsup’s never pled any claims under the Act, and 3) there is no contract underlying the claim.
{39} Questions 4 and 5 of the special verdict form dealt with the Act essentially by name and asked for an amount believed to be the damages caused thereunder and for an apportionment between North River and Alexsis. The questions were not filled in with a “zero,” as they could have been, but were left blank, apparently because of an error on the special interrogatories form. That form sought specific answers regarding the conduct of the parties and was supposed to refer the jury to an appropriate place on the special verdict form where the ultimate verdict is stated, based on the facts stated in the interrogatories. In this case, the reference was erroneous, so that part of the special verdict form was never filled out.
{40} Where there appears to be a conflict between the special verdict and the special interrogatories, we attempt to reconcile the apparent differences in order to avoid a new trial. If there is a way to construe the jury’s findings as reasonable, we will do so. Atlantic and Gulf Stevedores, Inc. v. Ellerman Lines, Ltd.,
“unconscionable trade practice” means any act or practice in connection with the sale, lease, rental or loan, or in connection with the offering for sale, lease, rental or loan, of any goods or services ... which to a person’s detriment ... (2) results in a gross disparity between the value received and the price paid.
NMSA 1978, § 57-12-2(E)(2) (emphasis added.) There is, therefore, a finding of a violation of the Act. The only problem is a technical one and no inconsistency or confusion on the part of the jury is indicated. Furthermore, no objection was ever made to the interrogatories.
{41} The claim that Allsup’s never pled a violation of the Act is contrary to the record. In Allsup’s’ first amended complaint, the defendants, including North River, were charged in the Sixth Claim with having violated the Act. North River then claims there was no contract supporting the claim under the Act. While we do not hold that a contract is necessary to bring such a claim, we need not deal with this issue because we have found there was in fact a contract.
C. Letter of Credit
{42} The next issue raised in North River’s cross-appeal is whether the trial judge erred in granting Allsup’s’ motion for summary judgment on the issue of North River/Crum and Forster’s drawdown on a letter of credit. Effective March 31, 1986, Allsup’s, North River, and Crum and Forster entered into an agreement called “Paid Loss Retrospective Retention Premium Payment Agreement.” It was required that Allsup’s provide security for potential unpaid premiums, which they did in the form of Irrevocable Letter of Credit No. 1427, dated August 8, 1986. The Letter of Credit was amended twice to refer back to the years 1985 and 1984. All amendments referred to paid loss premium agreements. On April 30, 1987, Letter of Credit No. 1427 was replaced with letter of credit No. 1478. This occurred fairly contemporaneously with the parties changing from a Paid Loss Retrospective Retention Premium Payment Agreement to an Incurred Loss Retrospective Retention Premium Payment Agreement. Letter No. 1478 did not refer to any particular contract and was in effect until April 1, 1990. It was drawn down on for premiums due under the later incurred loss policy. Allsup’s claims that it was the understanding of the parties that No. 1478, merely replaced No. 1427 and referred to the same paid loss policies. North River claims the different language in letter No. 1478 means it was intended to cover all premiums owed by Allsup’s, and that its drawdown for premiums due under the incurred loss policy was, therefore, rightful.
{43} “In reviewing a grant or denial of summary judgment, this Court considers the undisputed facts, and determines whether under those facts summary judgment was proper as a matter of law.” Rummel v. Lexington Ins. Co.,
D. Punitive Damages
{44} North River first advances two due process arguments for why the punitive damages assessed by the jury were excessive, and then argues that in awarding punitive damagеs, the jury abused its discretion. North River’s first constitutional argument is that insurance companies in general and North River in particular were singled out by the jury instructions as having to act only unreasonably, as opposed to acting in bad faith, in order to be held liable for punitive damages, and that its due process right was thereby violated. It argues there is no rational basis for this distinction, and that the disparate treatment aimed at insurance companies violates U.S. Const, amend. XIV and N.M. Const. art. 2, § 18 because such treatment creates a classification that is “so grossly over inclusive as to defy notions of fairness and reasonableness[,]” citing McGeehan v. Bunch,
Under the “bad faith” claim, what is customarily done by those engaged in the insurance industry is evidencе of whether the insurance company acted in good faith. However, the good faith of the insurance company is determined by the reasonableness of its conduct, whether such conduct is customary in the industry or not. Industry customs or standards are evidence of good or bad faith, but they are not conclusive.
{45} North River interprets this instruction (essentially UJI 13-1705, NMRA 1998) as meaning that the slightest unreasonableness makes an insurance company hable for punitive damages, which, it is argued, conflicts with McGinnis v. Honeywell,
{46} In addition, we have held that if a jury receives an instruction that is subject to more than one interpretation, the ambiguity may be clarified by another part of the instructions. State v. Sosa,
To establish the claim of breach of the implied covenant of good faith and fair dealing by defendants North River, U.S. Fire, Alexander and Alexander and Alex-sis, Allsup’s has the burden of proving that one or more of the defendants acted in bad faith by not giving equal consideration to the interest of Allsup’s as to its own interest in at least one of the following ways
Related to its claims for punitive damages, Allsup’s contends and has the burden of proving that any bad faith actions on the part of North River were malicious, reckless or wanton, and, therefore punitive damages should be awarded.
(Emphasis added.) If instruction No. 37 was unclear in any way, no ambiguity would survive a reading of No. 5, which comports with our holding in Paiz,
[a] mental state sufficient to support an award of punitive damages will exist when the defendant acts with “reckless disregard” for the rights of the plaintiff — i.e., when the defendant knows of potential harm to the interests of the plaintiff but nonetheless “utterly fail[s] to exercise care” to avoid harm.
(Citations omitted, emphasis in original.) We recognized in Paiz that the law penalizes “conduct that constitutes a ‘wanton disregard’ for the nonbreaching party’s rights, or ‘bad faith,’ with an award of punitive damages.” Id. at 212,
{47} Secondly, the parties have filed supplemental briefs on the size of the punitive damages award, in which North River contends they are excessive under BMW ofN.A. v. Gore,
{48} We hold that the punitive damages awarded by the jury in this case were not violative of the 14th Amendment. Unlike the situation in BMW, there was a finding of bad faith in this case as substantially supported by evidence of the failure of Crum and Forster/North River to control or disclose significant and material facts concerning the desperate state of affairs in the claims handling area. This included proof that Crum and Forster officials believed that poor claims handling had resulted in at least one apparently meritorious bad faith claim in an individual worker’s compensation ease being handled by Alexsis; that North River had performed an audit revealing that Alex-sis’ performance in claims handling was “far below company standards;” that Crum and Forster was seriously considering taking back the claims handling operation if there was little or no improvement in Alexsis’ performance; that Alexsis’ operation was “totally unacceptable;” and that Crum and Forster had reached thе point where it could not tolerate the poor quality of service of Alex-sis. This conduct took place with knowledge that an “incurred loss” premium arrangement existed between Crum and Forster and Allsup’s, which meant that bad claims administration required increasingly higher contributions by Allsup’s to reserves to cover the claims, thus increasing income to Crum and Forster. There should be no doubt that the jury, which had found that there was a contract for supervision of claims handling, had before it substantial evidence that Crum and Forster’s failure to adequately supervise or disclose the facts was deserving of censure. There was also substantial evidence that the drawdown on the letter of credit occurred willfully and in bad faith without reference to whether the policy premiums to which the letter applied were overdue, to wit the letter from Crum and Forster’s attorney acknowledging that Letter of Credit No. 1478 applied to paid loss, not incurred loss, policies. The acts of North River can be considered to be reprehensible and affirmatively in bad faith, in contrast to the minor, relatively harmless and innocuous concealment in BMW.
{49} It is difficult to predetermine a due process standard when it comes to the ratio or рroportion between compensatory and punitive damages. As the Court reiterated in BMW: “We need not, and indeed we cannot, draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable. We can say, however, that [a] general concer[n] of reasonableness ... properly enters into the constitutional calculus.” BMW at 582-83,
{50} Nor do we think that North River’s legitimate expectation of sanctions as a result of its conduct was less than that which resulted. The intentional acts with which North River was charged parallel those described as unfair in the Insurance Code, NMSA 1978, § 59A-16-20(C) (1984). These intentional acts include failing to adopt and implement reasonable standards for the prompt investigation and processing of insureds’ claims arising under policies, which apparently for mere negligent violation is potentially punishable by a revocation of the license to sell insurance. NMSA 1978, § 59A-1-18 (1984). Finally, unlike BMW, there is no statutory fine for this or similar misconduct.
{51} Beyond the constitutional minimum, we have held that “[p]unitive damages do not have to be in reasonable proportion to actual damages, but they must not be so unrelated to the injury as to plainly manifest passion and prejudice rather than reason and justice.” Green Tree Acceptance, Inc.,
Where a party prays for an award of punitive damages and the evidence is sufficient to permit the issue of punitive damages to be considered by the jury, the amount of such damages is left to the sound discretion of the jury based on the nature of the wrong, the circumstances of each case, and any aggravating or mitigating circumstances as may be shown.
{52} Id. As in Green Tree, we find here that due to the recklessness and bad faith of the defendant North River, the issue of punitive damages was properly sent to the jury. We further find that there was substantial evidence in the record to support the jury’s award of punitive damages. As we said in looking at the issue from the point of view of whether the remittitur was proper, there is no evidence or claim that passion or prejudice, rather than reason and justice, influenced the jury in their awarding punitive damages.
{53} The final issue relating to punitive damages concerns the fact that North River was assessed compensatory damages in the amount of $540,000 as excessive premiums billed Allsup’s, and Allsup’s was assessed damages of $1,645,708 corresponding to unpaid premiums due North River. For its part, North River was assessed an additional $4,000,000 in punitive damages. North River therefore points out first that in most cases punitive damages cannot be recovered without compensatory damages having been awarded. See Hudson v. Otero,
{54} In this ease, we have all the elements present that would naturally give rise to punitive damages — liability, compensatory damages suffered as a consequence of the liability, and a culpable mental state, or bad faith. The mere fact that compensatory damages were also assessed against Allsup’s for failure to pay premiums does not erase any of these factors. The appropriateness of punitive damages is tied directly to the mental state underlying liability and the fact of actual damage. The fact that damages may be offset does not mean that they were not caused or that they never existed sufficiently to support a punitive damages award. Therefore, there was a complete basis on which to assess punitive damages against North River.
IV. CONCLUSION
{55} To summarize, our principal holdings in this case are as follows: 1) that when a trial court grants a motion for remittitur or new trial in the alternative, a party may accept the remittitur “under protest” and appeal directly, with certain requirements set by the trial judge; 2) that the covenant of good faith and fair dealing may be enforced for a failure to disclose; and 3) that the jury award of punitive damages in the amount of $4,500,000 was not unconstitutional or otherwise excessive.
{56} For all of the above stated reasons, the judgment of the district court is affirmed in part and reversed in part.
{57} IT IS SO ORDERED.
Notes
. The claims against defendants Alexsis, Inc. and Alexander & Alexander were settled after trial.
. North River says in its brief: "North River and U.S. Fire were both members of a group of insurance companies that sometimes used the assumed name of Crum & Forster Commercial Insurance, or 'CFCI,' during the relevant period____ Thus references in the record and transcripts to 'Crum & Forster' would include defendants North River and U.S. Fire.”
. See note 2 for the relationship between Crum and Forster and North River.